IBERIAN DAILY 28 AUGUST (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: FCC, SIEMENS GAMESA.MARKETS YESTERDAY AND TODAY
Stock markets reverted losses
The initial losses from yesterday’s opening bell eased, with stock markets ending with gains close to +1.0%. In the Euro STOXX, most sectors saw gains, led by Basic Resources and Technology, while Utilities and Telecoms were the only sectors ending in negative territory. On the macroeconomic level, July’s durable goods orders climbed in July more than expected, even the core component. In Mexico, the 2Q’20 GDP was raised slightly to -18.7% YoY from -18.9% preliminary. In China, the recovery pattern continued in July’s industrial earnings, climbing 19.6% YoY vs. 11.5% previously. India announced the greatest number of confirmed Covid-19 cases in one day (76,000 yesterday) and more than 1,000 deaths (60,000 in total, the fourth highest rate in the world). In US Results NetApp came in better than expected.
What we expect for today
European stock markets would open without a clear direction in Europe. Currently, S&P futures are down -0.2% (the S&P 500 ended up +0.5% vs. its price at the closing bell in Europe). Volatility in the US rose (VIX 23.30%). Asian markets are sliding (Japan -0.4% and Hong Kong -0.8%).
Today in the US we will see Jackson Hole meeting along with the 2Q’20 GDP and July’s pending holes sales, in the euro zone July’s M3. As for auctions, Italy will issue 6M T-bills. In US Results, Tiffany, Gap and HP, among others, will release its earnings.
COMPANY NEWS
SIEMENS GAMESA. 2020-23 Strategic Plan. We maintain our SELL recommendation.
The company yesterday presented its 2020-23 Strategic Plan with a long-term guidance (2023 and beyond) with growth rates above the market (+4% CAGR’19-25e in installed GW) and an 8-10% adjusted EBIT margin (in line with the previous plan; vs. 7.7% BS(e) and 8.4% consensus in 2023). However, the 2021 guidance is disappointing in margins (3%/5% vs. 6.5% BS(e) and 6.3% consensus), which along with its good recent performance (+68% vs. IBEX from the market highs seen in February), would justify yesterday’s poor reaction (SGRE slid -4.6%). Even assuming a reasonably optimistic scenario (+8% CAGR’19-24e and 9% EBIT margin in perpetuity vs. +3% and 8% currently, respectively), our T.P. would be < € 19.00/sh. (vs. € 12.54/sh. currently and vs. current trading levels of € 22.20/sh.), yielding negative upside, and thus we maintain our SELL recommendation and place our T.P. Under Revision.
Fomento de Construcciones y Contratas is the parent company of a group engaged in sanitation services, cleaning, maintaining, purification and distribution of water, construction of highways, hydraulic works, marine works, air and rail transport infrastructure, urban developments, housing, non-residential buildings, office buildings, toll highways, parking garages, marinas and water treatment plants. Co. is also engaged in the manufacture and sale of cement and cement infrastructures, such as precast concrete elements; and in the financial markets, and real estate development, leasing and tourism.
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